Nifty down nearly 13% in 2026 as September delivers 11% of FIIs’ year-to-date selling

Reports coming in for today mention that Foreign institutional market participants sold a net Rs 44,013 crore of Indian equities in September. That single month accounted for roughly 11% of their total year-to-date net outflow of around Rs 4.03 lakh crore.

The intensity of the selling was concentrated at the end of the month.

Nearly two-thirds of September’s entire outflow, around Rs 29,175 crore, came in just the final four trading sessions. On 30 September, FIIs sold Rs 10,148 crore, the largest single-day outflow since 23 March, when they had sold around Rs 10,414 crore.

This late surge helped wipe out much of the tentative recovery that had taken shape earlier in the year.

After a sharp slide in the first quarter of 2026, the Nifty staged a meaningful rebound in the Apri-June period and posted upside of around 2% in July. That optimism largely faded in September. The index closed the month at 22,620.45, down 6.1%, its weakest September performance since 2018.

As a result, the Nifty is now down nearly 13% for the calendar year so far, putting it on course for its worst annual performance since 2011. The Sensex is down around 15% year-to-date.

FIIs were net sellers on 16 of the 21 trading sessions in September.

Selling accelerated sharply towards the end of the month: Rs 3,694 crore on 25 September, Rs 5,353 crore on 28 September, Rs 9,980 crore on 29 September and Rs 10,148 crore on 30 September.

The month additionally saw some of the sharper single-day declines of the recent sell-off, including a 1.56% dip in the Nifty on 28 September.

Domestic institutional market participants remained net buyers on every session of September, accumulating Rs 76,030 crore. Their buying more than offset the foreign selling and kept combined institutional flows positive for the month. On the final day, DIIs bought Rs 11,272 crore against the FII outflow of Rs 10,148 crore.

Elevated crude prices, elevated US bond yields and persistent foreign selling weighed on sentiment through September. Traders at large noted that domestic flows, particularly through SIPs, keep act as a stabilising force, though they cannot fully neutralise concentrated foreign selling or global shocks.

Akshat Garg, Head of Research & Product at Choice Wealth, stated foreign market participants additionally sold nearly Rs 14,500 crore in index futures during the September series. He pointed to record August SIP inflows of Rs 32,297 crore and contributing SIP accounts crossing 10 crore as evidence of a structural shift. “This is no longer a tactical flow that reverses on the first bout of volatility; it is a monthly, price-agnostic floor that is steadily absorbing what FIIs distribute,” he stated.

Vipul Bhowar, Executive Director and Head of Equities at Waterfield Advisors, stated domestic retail SIPs are bringing in around $3 to 3.5 billion a month. While this provides meaningful backing, he cautioned that SIPs alone cannot fully bridge the valuation gap or absorb abrupt FII selling and global shocks. He noted that the broader correction since late 2024 has reduced speculative excess and lowered valuations, creating a more fundamentals-fuelled base, provided crude prices and global rates stabilise. Further downside risk stays if crude rises above $100 a barrel.

At current marks near 22,700, the Nifty trades at around 19.2 times trailing earnings. Choice’s base case points to a possible recovery window in November-December if earnings and festive demand improve, with visible downside noted capped near 21,800 in a more adverse scenario.

September left a clear imprint on the year’s scorecard: it delivered more than a tenth of FIIs’ entire year-to-date selling, accelerated the foreign outflow at a critical point with the biggest single-day exit in nearly six months, and largely erased the mid-year recovery hopes that had briefly returned to the market.